Flurry recently quantified China’s meteoric adoption of iOS and Android applications. While China ranked 10th in application sessions at the beginning of 2011, it finished the year in 2nd place, only behind the United States. With its large population and rapidly emerging middle class, adoption of apps vaulted China into the position of world’s 2nd largest app economy. In additional analysis, Flurry also determined that China has the most market upside, based on calculating those in China who can afford smartphones versus the current installed base.
This report reveals that, for the first time ever, China now leads in new smart device adoption (iOS and Android smartphones and tablets). We also update app usage velocity trends for China and the rest of the world, since first studying this late last year. For this report, Flurry used its entire data set, tracking more than 1 billion anonymous, aggregated application sessions per day. More than 60,000 companies use Flurry Analytics across more than 160,000 applications.
China's Growth Spurt
Let’s start with a look at the fastest growing countries, as measured by app session growth.
Comparing Q1 of 2011 versus Q1 2012, the chart above shows the ten fastest growing countries in terms of app sessions. A session is the launch and use of an application. For example, a consumer who opens a news application and then spends two minutes reading various articles counts as one session. Starting on the left, China leads the world in app session growth, with an enormous growth rate of more than 1100% between Q1 2011 and Q1 2012. China’s growth rate is particularly staggering given that it was already the world’s 7th largest country in terms of app sessions by the end of Q1 2011. This speaks to the country’s sheer population as well as increasing affluence among a meaningful part of its population. Please note that we project the last ten days of Q1 2012.
Building an App? Go East, Young Man!
We next study new device activations between China and the U.S., with amazing results.
The above chart shows new iOS and Android device activations per month in the U.S. and China for the last 15 months, from January 2011 through March 2012. In January 2011, the U.S. accounted for 28% of the world’s total iOS and Android device activations, while China accounted for 8%. In February, Flurry calculated that China surpassed the United States in monthly new iOS and Android device activations for the first time in history. China is now the world’s fastest growing smart device market. For March, we project that China will account for 24% of all iOS and Android device activations, while the U.S. will account for 21%. Again, please note that we project the several days of March to round out Q1 2012.
With China now activating more devices per month than the U.S., this means that the gap is closing between the two countries in terms of installed base. Not only is China already the second largest app economy, but also could eventually overtake the U.S. as the country with the largest installed base of smart device users. We estimate that the U.S., a more mature market, currently has more than twice as many active devices than China. However, China, a faster growing, emerging market, already has twice as large an installed base as the next largest market, the UK.
Apps Without Borders
In this last chart, Flurry looks at the shift in application usage across the world.
The chart above compares mobile app sessions tracked by Flurry Analytics in Q1 2011 versus Q1 2012. The green area shows the percent of app sessions occurring in the United States, the leading mobile app market. While the absolute number of sessions in the U.S. has more than doubled between Q1 2011 and Q1 2012, its share of total sessions has declined from 56% to 46%. In other words, while the U.S. app market is growing rapidly, the rest of the world is growing even faster. Looking at the balance of the top 10 countries (ranks 2 – 10: China, UK, South Korea, France, Australia, Canada, Japan, Germany and Spain), this group has increased in collective sessions by 3.4 times between Q1 2011 and Q1 2012, resulting in an increase in total session-share from 27% to 30%. Further, the rest of the world (another 217 countries across which Flurry tracks user sessions), has grown by more than 4 times, increasing in session-share from 17% to 24%.
No matter how we slice it, the application market continues to grow at unprecedented rates, and increasingly across more borders. With smart devices adoption rates more than four times greater than those witnessed during the 1980s PC revolution and twice as great as those seen during the 1990s Internet Boom, no other consumer technology has been more accessible than smart device application software. It’s literally taking over the world.
The era of mobile computing, catalyzed by Apple and Google, is driving among the largest shifts in consumer behavior over the last forty years. Impressively, its rate of adoption is outpacing both the PC revolution of the 1980s and the Internet Boom of the 1990s. Since 2007, more than 500 million iOS and Android smartphones and tablets have been activated. By the end of 2012, Flurry estimates that the cumulative number of iOS and Android devices activated will surge past 1 billion. According to IDC, over 800 million PCs were sold between 1981 and 2000, making the rate of iOS and Android smart device adoption more than four times faster than that of personal computers.
Powerfully, smartphones and tablets come with broadband connectivity out-of-the-box, instantly combining the best of “Silicon” and “The Cloud” for consumers. The Internet, which served to connect the installed base of PCs, grew to 495 million users by the end of 2001, according to the International Telecommunication Union. With the Internet beginning its commercial ramp in 1996, iOS and Android devices will see double the number of device activations during its first five years compared to the number of Internet users reached during its first five years (Internet 1996 – 2001 vs. Smart devices 2007 – 2012).
On top of this massively growing iOS and Android device installed base, roughly 40 billion applications have already been downloaded from the App Store and Android Market. More than ever, consumers are splitting their time accessing services on the Internet from PCs versus doing so on mobile devices from apps. Last summer, Flurry published a report detailing how the average smartphone user, for the first time ever, began spending more time in their mobile applications than they do browsing the web. Updating the analysis, Flurry finds the usage gap continues to widen. Let’s look at the updated numbers.
The chart compares how daily interactive consumption has changed over the last 18 months between the web (both desktop and mobile web) and mobile native apps. For the web, shown in green, we built a model using publicly available data from comScore and Alexa. For mobile application usage, shown in blue, we used Flurry Analytics data, which tracks anonymous sessions across more than 140,000 applications. We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis.
Since conducting our first analysis in June 2011, time spent in mobile applications has grown. Smartphone and tablet users now spend over an hour and half of their day using applications. Meanwhile, average time spent on the web has shrunk, from 74 minutes to 72 minutes. Users seem to be substituting websites for applications, which may be more convenient to access throughout the day.
Our analysis shows that people are now spending less time on the traditional web than they did during the summer 2011. This drop appears to be driven largely by a decrease in time spent on Facebook from the traditional web. In June 2011, the average Facebook user spent over 33 minutes on average per day on the website. Now, that number is below 24 minutes. Time spent on the web without Facebook has grown at a modest rate of 2% between June 2011 and December 2011.
The analysis also shows that people are spending ever more time in applications. In fact, time spent in apps and the web, combined, has grown as users lead a more connected life. This growth though has been driven entirely by applications. The growth in time spent in mobile applications is slowing – from above 23% between December 2010 and June 2011 this year to a little over 15% from June 2011 to December 2011. The growth is predominately being driven by an increase in the number of sessions, as opposed to longer session lengths. Consumers are using their apps more frequently.
Facebook Pushes into Mobile Apps
Based on our analysis, we believe that Facebook users, and users of other traditional style websites, are increasingly accessing services through mobile applications than from desktops. Nielsen recently reported that Facebook is the most used app on Android among 14 – 44 year olds, surpassing usage of Google’s own native, pre-installed apps. Additionally, Facebook Messenger became the top downloaded app, at least one time during 2011, across more than 100 different App Store countries. In the U.S., the largest App Store market, Facebook Messenger ranked as the top overall app across most of the holiday week, during which more downloads occur compared to any other week.
With Facebook’s recent push into HTML5 with Project Spartan, where apps built for Facebook’s platform can run on top of the Facebook app, instead of requiring the user to launch the iOS app equivalent, this poses a disintermediation challenge to Apple. As Apple and Google continue to battle for consumers through the operating system and devices, Facebook is demonstrating that it can leverage its hold over consumers at the software level, through the power of the social network, across multiple platforms.
Facebook and Google are already locked in a battle for the online consumer, with Facebook having steadily taken share from the search engine giant over the last several years. Recently, as Google countered with its socially-oriented Google Plus, Circles and Hangouts services, Facebook added features such as news feeds to further lock in consumers to its service by obviating the need to discover content through search.
Likewise, Apple’s recently launched iCloud service, which allows consumers to store their most personal content, including music, photos and contacts, as well as its deep integration with social-service, Twitter, appears to buttress against Facebook’s ability to control the consumer relationship. With games as the top app category across Facebook, iOS and Android, as well as having become increasingly social in nature, Facebook is countering to reclaim valuable game play sessions it earned from its own platform play launched in 2007, rather than simply surrendering them to iOS and Android, who have effectively wooed consumers off of the web platform to mobile apps.
Games & Social Networking Dominate Mobile App Usage
With mobile app usage soaring, Flurry additionally studied which categories most occupy consumers’ time. The results are shown in the pie chart below.
The chart clearly shows that Games and Social Networking categories capture the significant majority of consumers’ time. Consumers spend nearly half their time using Games, and a third in Social Networking apps. Further considering that Flurry does not track Facebook usage, the Social Networking category is actually larger. Combined, from just what Flurry can see, these two categories control a whopping 79% of consumers’ total app time. This breakdown in usage reveals Facebook’s inherent popularity as the leading social network, as well as how important controlling the game category is for all platform providers. As we drill down into the category data, consumers use these two categories more frequently, and for longer average session lengths, compared to other categories.
Any way we slice it, Games and Social Networking apps deliver the most engaging experience on the web and mobile today, and set the stage for the battleground for controlling the consumer relationship going forward for all platform providers on all platforms.
The last week of the year, from December 25 through December 31, sees more iOS and Android device activations compared to any other week of the year. Starting with Christmas Day, the largest single device activation day of the year, the week between Christmas and New Year’s Day is filled with significantly elevated device activations and app downloads. For application makers, this holiday “power week” is far more important than the run-up to Christmas itself. This report reveals that the last week of 2011 was the largest week for device activations and app downloads in iOS and Android history.
For this report, Flurry leverages its data-set from over 140,000 apps running on the significant majority of iOS and Android devices. With its application penetration, Flurry can detect over 90% of all new devices activated each day. Additionally, with its analytics service in more than 20% of all applications downloaded on a given day from the App Store and Android Market, Flurry can reliably estimate total iOS and Android downloads. To benchmark against the market, Flurry regularly triangulates its device and download figures with data released publicly by Google and Apple.
In its most recent report, Flurry estimated that a record-breaking 6.8 million iOS and Android devices were activated on Christmas Day, along with an equally record-breaking 242 million application downloads. Studying the data from December 25 – December 31, additional records were set, now for the highest number of device activations and app downloads of any week in history. Over the holiday “power week,” Flurry estimates that over 20 million iOS and Android devices were activated, and 1.2 billion applications were downloaded. Let’s drill down further into the downloads.
The columns in the chart compare the number of app downloads during Christmas through New Year’s Day (on the right) versus the average of the first two equivalent weeks of December (on the left). The seven days from December 25 – December 31 spanned from a Sunday to a Saturday. As such, we take the average of the first two full Sunday-to-Saturday weeks in December to establish a baseline. The average downloads over these weeks are surprisingly even. For background, the third full Sunday-to-Saturday week, not shown in the chart, December 18 – 24, is elevated slightly due primarily to December 24 downloads. Up until the final week of the year, this penultimate week set the download record with 857 million downloads. The final week of the year, between Christmas and New Year’s Day, grew by 60% over the early-December baseline, historically punching through the billion download barrier for the first time ever to deliver 1.2 billion downloads.
This second chart shows the top twenty countries across which the record 1.2 billion downloads were distributed. Starting from the left, the U.S. took the lion’s share with 509 million downloads, or 42.3%. Referencing an earlier report, wherein Flurry sized the current installed base and market upside for each country, it’s not surprising that the U.S. continues to lead the rest of the world by such a large margin. We estimate that just prior to the holidays, there were 109 million active iOS and Android devices in the U.S. market. Compared to the worldwide total active installed base of 246 million, this was 41%. China, the world’s second largest app market, which has roughly one-third of the U.S. installed base saw only one-fifth of the relative downloads. It’s important to note that the celebration of Christmas as a holiday impacted download performance. While the United States widely celebrates Christmas, China is largely non-religious, with over 60% of the population considering themselves agnostic or atheist. In China, Christians make up just 3 – 4% of the population.
Following the trend that Western countries more widely celebrate Christmas – note the higher positions of countries like the United Kingdom, Canada, Germany, France, Australia, Italy, Spain and Mexico in the chart – these countries over-indexed against largely non-Christian countries of China, South Korea and Japan. For example, South Korea and Japan have the 4th and 5th largest smart device installed bases of all countries, yet they ranked 7th and 10th, respectively, for downloads over the record week. Christmas is not recognized as a national holiday in Japan, and in South Korea, roughly half the population self-identifies as non-religious. As a point of interest, Canada appears to have over-indexed the most, using its 8th largest installed base to drive the 4th most downloads over the holiday period.
Looking forward to 2012, Flurry expects breaking the one-billion-download-barrier per week will become more common-place. While iOS and Android growth continues to amaze, the market is still by all measures relatively nascent. We look forward to continuing to chart the unprecedented adoption of mobile computing devices, usage of applications and the way in which this technology is changing consumer behavior worldwide. Happy New Year from everyone at Flurry.
In 2007, Apple and Google started a mobile computing revolution. Over the last four years, adoption of this new class of smartphone has been unprecedented. With powerful devices, connected to broadband networks and rich digital stores, an app economy was quickly built on top of it.
Beginning last year, Flurry observed that consumers using apps began expanding beyond early-adopting U.S. and Western European markets, starting to include more emerging economies. In a previous post, we shared details about this shift, highlighting the fastest growing international markets, with emphasis on China’s extraordinary growth.
As 2011 comes to a close, and we look forward to 2012, we size today’s installed base of iOS and Android smart devices (smartphones and tablets) as well as identify markets where the most future upside exists. We start by looking at how many active iOS and Android devices run applications by country.
Using data collected from Flurry’s data-set of more than 140,000 apps running on smart devices worldwide, we get a snapshot of how many iOS and Android devices ran apps over the last 30 days. Note that we gross up our figures to reflect differences in penetration per platform to provide market-level estimates. Among the top 20 countries, the U.S. still makes up the largest chunk of the world’s active installed base, with 109 million out of 264 million, or 41%.
Of note, China and South Korea now hold two of the top five positions, boasting addressable audiences greater than that of more developed countries such as Japan, France and Germany. Also worth noting is that our count of 264 million active units in the market is about half of what Apple and Google publicly state have been activated. The difference is primarily due to old device replacement. Flurry is counting recently used devices versus life-to-date device activations.
With smart device adoption skyrocketing worldwide, we next look at which markets hold the most future promise. With greatly varying disposable income per country, and recognizing that children do not purchase devices, Flurry used available data from several sources to adjust its data for an apples-to-apples comparison. First we used the “adult” population counts from the International Monetary Fund (IMF), which IMF defines as 15 to 64 years of age. Next, we adjusted our numbers based on the size of the middle class in each country, primarily using a study by Miller-McCune. We finally estimated the size of the upper class per country, who by extension can also afford a smart device. After making adjustments, we are left with adult consumers who have the financial means to afford a smartphone device per country. Doing so, populous countries like India, China and Brazil, which also suffer from income disparity, are not over-estimated in our addressable market calculations.
Starting from the left, China has 122 million consumers who do not yet use an iPhone or Android device, but could afford one. In short, this chart represents untapped potential. Emerging economies – China, India and Brazil – make up three of the top five market opportunities. Over the next several years, as these countries continue to modernize, they will significantly expand the worldwide addressable audience for smartphones.
Bringing the data together, we next look at market maturity, which is the measure of how penetrated smartphone devices are among a country’s addressable audience. To illustrate which markets are most mature, we chart the top 10 countries ranked by penetration.
The vertical axis measures our total addressable audience (TAM), which we define as adults, 15 – 64, who are at least middle-class. The TAM per country is represented by the larger, light blue circles. The U.S., with the largest light blue circle, has the largest TAM at 200 million. The horizontal axis shows percent penetration, which is the active user (iOS or Android device that used an app over the last 30 days) divided by the TAM. For example, Sweden is the most mature country with 3.2 million of 5 million (66%) addressable consumers already using iOS and Android devices. France, which ranks 10th in maturity, has 9.6 million of 34 million (28%) consumers using iOS and Android devices. So, from left to right, penetration increases. And from bottom to top, TAM increases. The U.S. leads the world in installed base because its large, addressable audience has been well penetrated, 91 million of 200 million (55%).
Completing our study, we look at the world’s largest addressable markets, regardless of penetration.
Because this chart measures future potential, TAMs are much larger relative to active user bases. The result, visually, is a lot more “light blue.” Many of the world’s largest countries have largely un-penetrated markets, primarily due to standards of living (emerging markets) or increased competition for consumers’ disposable income (developed markets). In either case, the TAM is there, but the adoption hasn’t yet occurred. So, many of these markets are future bets with the time of maturity somewhat variable and unknown. In this chart, the U.S. has both the largest current installed base and market upside. Again, this is because of its unique, well-penetrated and large, affluent population. Next China, given its very large population (1.3 billion), along with a growing middle class who has already begun adopting smart devices, has the world’s second largest market potential. In comparison, even though India has the world’s second largest population (1.2 billion), its TAM is much smaller than China’s because of India’s very low standard of living. The result is that, even though its total population is not far behind China’s, its total addressable market is. Further, the adoption of smartphones and tablets among its TAM has been small. Finally, Japan, the world’s fourth largest market, has a lot of upside given light penetration of iOS and Anroid devices against its large, addressable market.
iOS and Android sales boomed in 2011, with international smartphone and tablet adoption accelerating. As we look forward to 2012 and beyond, we expect the trend of international expansion to continue. With the world’s estimated middle class now totaling 1.8 billion, there remains a lot of unconquered territory for Apple and Google, who currently lead the charge in driving smart device adoption. This is equally good news for developers, who build apps for these platforms, and directly benefit from their installed base growth.
Apple and Google have ushered in a new era of mobile computing whose consumer adoption is rivaled only by the PC revolution of the 1980s and the Internet boom of the 1990s. Since 2007, more than 440 million iOS and Android devices have been activated, with 1 million additional devices across both platforms now activated each day.
On top of this massive and rapidly expanding platform, a software battle is raging. With very low barriers to entry, and friction-free digital distribution, companies have been feverishly building, shipping and updating applications, intent on capturing and monetizing consumer audiences. To illustrate this growth, let’s look at the number of available apps in the App Store vs. the Android Market.
This chart is comprised of publicly available data. Where data wasn’t available for the same month in both markets, we estimated the number of available apps based on interpolation (e.g., approximating a point between two existing data points), or by looking at the growth rate leading up to a specific month. The number of apps is growing significantly in both markets. And while the App Store has attracted more apps to date, the Android Market is closing the gap. Now, let’s turn our attention to total app downloads.
The chart above sums Android Market and App Store downloads per month. Starting on the left, with January 2010, we show downloads per month every three months, until we reach October 2011. In October 2011, we estimate over 2.6 billion apps were downloaded. The number of apps now downloaded is four times greater than this time last year, in October 2010. With the holiday season under two months away, the 3 billion-mark download per month mark surely will be shattered this December. Month-over-month, app downloads have been growing at an astounding rate 11.4%. With app downloads growing swiftly, even faster than the number of apps being made available, let’s now look at app retention.
This chart shows the percent of consumers that continue using an app, since their first use, over 12 months. At the far left, marked as month “0,” 100% of a consumer cohort begins using an app. After three months, 24% of them continue using. After 6 months, this percent shrinks to 14%, and, by 12 months, only 4% are left. For this analysis, we compiled data from 25 apps downloaded a cumulative 550 million times.
With app downloads increasing month-over-month and app usage not only climbing, but also surpassing web usage, we know that consumers are both discovering and using apps more than ever. And while the industry often talks about discovery as a problem, we think the real problem is traffic acquisition. To understand this, we turn to the web.
Online, website marketers don’t stop marketing after they get a consumer to visit the site only for the first time. They can get in front of the consumer in various ways again, and spur a return visit by having the consumer click on a link. Typically, online, a visit starts from an organic search result, but search doesn’t exist for apps the same way, and consumers seem to browse more, especially given touch interfaces. The closest thing to search in the app world is a consumer browsing the top ranking lists, which represents “popularity” in a similar way to top ranking organic search results. However, in the app world, top rank lists are more like “paid search” since heavy advertising is what typically launches an app to rank high, at least for a while.
Further, always trying to rank high, as a tactic, is not only untargeted and expensive, but also suffers from diminishing returns. First, the bar required to make the top 25 keeps rising, as the installed base of consumers grows and more apps compete for a fixed number of top spots. Regarding diminishing returns, an app can only appeal to first-time-users each time it ranks. It’s a pure first-time acquisition tool. App users don’t re-launch apps when seeing them in the top rankings. They need to go to their app icon and launch from there. So as an app’s installed based grows over months, even years, the relative number of incremental users that can be added from ranking in the charts continues becomes relatively smaller. In other words, over time, an app is better off targeting its much larger installed base of users to increase usage. This is the equivalent of traffic acquisition.
The key challenge is that developers lack the tools to bring traffic back to their app, post-download. And, therefore, the industry has a traffic acquisition problem, not a discovery problem. Only when compelling ways of connecting with existing app users are established, that allow the easy re-launch of an app, can app makers address retention through marketing, and fully control their own traffic acquisition.
Smartphones app usage, facilitated by explosive iOS and Android device adoption, has created among the fastest-growing media channels in the history of consumer technology. Flurry estimates that, worldwide, over 600 thousand apps are available for over 350 million iOS and Android devices. On average, consumers have downloaded over 65 apps per device.
While micro-transaction models, largely associated with free-to-play games, have proven the most lucrative business model for iOS and Android apps, there have been big bets placed on advertising. In addition to its own iAd initiative, Apple acquired Quattro, a mobile ad network, for $275 million in January 2010. This was shortly after Google announced its intention to acquire Admob, a rival ad network, for $750 million in November 2009.
In June 2011, Gartner projected that mobile advertising revenue would double to $3.3 billion worldwide in 2011, and grow from around $300 million to over $700 million in 2010 in North America. eMarketer, a research firm, predicts that U.S. mobile ad spending will top $1.1 billion this year.
In this report, Flurry focuses on the size and growth of available advertising inventory within iOS and Android applications. We used data from over 100,000 applications tracked by Flurry to estimate the size of this media channel. The chart below shows that U.S. app inventory is not only growing at a staggering rate, but also poised to absorb the equivalent of the entire U.S. Internet display advertising spend by the end of this year.
Reviewing the chart, we see that U.S. mobile app inventory has grown aggressively over the last year. With its growth trajectory, it will be able to absorb the entire U.S. online display ad spend by the end of the year. Another way to look at this is that, in approximately two years, mobile app inventory is growing so aggressively that it could easily meet the demand of a mature, 15-year-old form of online advertising.
To arrive at these figures, we first tracked the average number of ads shown per application session, which we found to be 4.3. The average application session is 4.2 minutes. For reference, the average session length of a website is just under 1 minute. We then looked at the number of sessions. Flurry tracks about 20% of all sessions in the market, and so we grew our numbers accordingly to come up with a market size.
We compared this inventory with the net spend on display advertising in the US. The US market currently spends a little over $12bn per annum on online display advertising. We assumed a conservative CPM (cost per 1000 impressions) of $2.50 for mobile application inventory. As a point of reference, a typical 30 second video on a large video streaming website such as Hulu has a CPM of $10-$15.
We at Flurry see four reasons why the market is growing at such a fast rate:
1) Smartphone growth – over a million smartphone devices are currently being activated on a daily basis
2) Publisher growth – The App store now has over 400,000 apps in the market and Android, with over 200,000, is catching up quickly
3) Session use growth - Flurry has previously found that smartphone users now spend more time in mobile apps per day than the average Internet users spends online.
4) Publisher integration of ads – with larger screens, targeting, and increased adoption of mobile applications, more publishers are integrating ads into their apps
Not only is inventory growing, but Flurry has also found that the average user of a smartphone is a very attractive target for advertisers. With a sample of more than 60,000 app users, we used location data and zip code statistics available from the U.S. Census Bureau to understand their demographics. On average, smartphone users are better educated and earn higher household incomes than the average of the U.S. population.
Additionally, looking at age and gender, we find that U.S. smartphone app users cluster into younger age groups and trend slightly more female.
In 1994, Hotwired.com was the first company to start selling display advertising in large quantities on the Internet. Back then, it took over six years for advertisers to embrace this model. For mobile apps, less than four years into their growth cycle, a critical mass of highly attractive consumers has been achieved. With growing awareness by brands and advertising agencies, we now expect digital advertising on mobile to take off in earnest.
Before Harry met Sally in the late ‘80s, the dating process typically involved an introduction from a friend. Then, with the Internet and email, dating evolved. By the time we were watching the movie You’ve Got Mail - and actress Meg Ryan was cementing her status as a romantic comedy lead - the concept of online dating was going main stream.
As a social ritual, dating is a human behavior easily accelerated by technology. And it’s big business. One recent study estimated that nearly 1 in 5 singletons, who have access to the Internet, use Internet dating. Another report stated that 17% of recent marriages in the U.S. were the result of online dating websites. In size, combining North American and European markets, the online dating industry well exceeds $2 billion in revenue. Within the world of mobile apps, the largest category on iOS and Android, behind gaming, is Social Networking, in which dating apps appear. Given the voracious consumer usage we’re observing, it may also be the smartphone’s second killer app.
In this report, Flurry compares the usage of dating websites (combined desktop and mobile web) to native mobile applications over the past 12 months. For Internet consumption, we built a model using publicly available data among the top 50 dating websites from Compete.com, comScore and Alexa.com. For mobile application usage, we used Flurry Analytics data, which now tracks over 90,000 mobile applications. With respect to dating, Flurry tracks a large set of dating apps with more than 2 million total users.
Let’s start with total time spent on eDating in mobile apps versus on the web. Note that for this report, we use the term “eDating” to encompass online and mobile app dating.
As you can see, mobile dating apps now command more time compared to online dating sites: 8.4 minutes vs. 8.3 minutes. A year ago, people spent more than twice as much time on the Internet for dating as they now do in mobile apps. However, mobile app usage has increased dramatically over the last year, from 3.7 minutes in June 2010 to 8.4 minutes in June 2011, overtaking online dating time spent. These findings parallel Flurry’s recent report that showed, in total, mobile app usage has overtaken Internet usage.
In terms of engagement, frequency of use is driving growth in time spent per day in mobile dating apps. Last year, the average user opened his dating app 2 times per day, a little under 2 minutes each time. Now he opens his app over 5 times a day, but for shorter periods of time, about 1.5 minutes per session.
Next, let’s look at the proportion of people who use the Internet vs. mobile apps for eDating.
The chart above shows that dating apps are more popular on smartphones than online dating sites are on the Internet. We measured this by looking at the proportion of unique users of dating services versus the total, per platform. For the Internet, we compared unique visitors of online dating sites versus the total number of people using the Internet, which totaled 12% in June 2010 and 13% in June 2011. For mobile apps, we compared unique users of mobile dating apps versus all apps, which yielded 15% in June 2010 and 17% in June 2011.
We also found that the number of people using dating apps is growing faster than the number using all apps. In short, dating is a growth category. Overall, the number of unique users of all applications increased 125%, year-over-year, while the number of unique users using mobile dating apps increased by 150% over the same period. Comparing Internet dating to mobile app dating directly, unique users in mobile dating apps now account for about one third compared to the number of Internet dating users, which has doubled over the last year.
In an age where Facebook allows consumers to display their relationship status and easily connect to friends of friends, we speculate why mobile dating apps are gaining unprecedented traction on iOS and Android. The first reason, we believe, is that dating itself is inherently local and better served by mobile. Now, unplanned meetings of two nearby matches is more of a possibility. Secondly, it seems that mobile apps facilitate better engagement throughout the day. Today’s eDater need not be in front of her computer to view potential matches, or to receive or send messages. Her phone is always by her side. Our engagement numbers regarding frequency and session length, described above, support this trend.
iOS and Android devices are versatile multi-purpose machines that have already significantly impacted the business models of music, games and other Media & Entertainment industry categories. And now, within the nexus of mobile-social-local, mobile dating apps appear to be looking for love in all the right places.
In this new age of mobile computing, the long-term success of Apple and Google depends largely on their ability to amass third-party developer support. Developer innovation improves the way consumers connect with others, entertain themselves, work, and more, all through apps. The more a platform provider can attract unique and superior content, the more appealing the hardware device appears to consumers prior to purchase and the more loyal they become afterwards.
Last week, Apple reported that it had sold a cumulative 200 million iOS devices. Currently the App Store contains more than 425,000 apps, with total downloads surpassing 15 billion. From the developer’s point of view, the most attractive aspect of the iOS consumer audience is that they all have credit cards on file with iTunes. This means 100% of them can seamlessly pay for apps and in-app purchases. All told, the App Store offers a powerful business opportunity to developers and has attracted leading mobile developer support.
At the same time, Google’s more open Android OS distribution strategy has garnered the support of numerous notable OEMs, spawning a rapidly growing installed base of Android devices that is gunning to overtake the iOS installed base. With broader distribution across more carriers, Android device activations surpassed 500,000 per day tweeted Andy Rubin last month. This growth is up from 300,000 activations per day reported just last December. In terms of apps, the Android Market has 200,000, and Google said it crossed the 4.5 billion downloaded application mark in May.
At Flurry, we regularly track developer support across the various platforms that compete for their allegiance. When companies create new projects in Flurry Analytics, they download platform-specific SDKs for their apps. Since resources are limited, the choices developers make in building for different platforms strongly signal their confidence in those platforms. They are literally investing their R&D budgets in the hopes of generating future revenue. In total, over 45,000 companies use Flurry Analytics across more than 90,000 applications. For this report, we compare Q1 to Q2 new project starts.
Studying the numbers, it’s readily apparent that Android has lost developer support to iOS. Specifically, Android new project starts have dropped from 36% in Q1 to 28% in Q2. Overall, total Flurry iOS and Android new project starts grew from 9,100 in Q1 to 10,200 in Q2. Of note, this drop in Android developer support represents the second quarter-over-quarter slide, which follows a year of significant, steady growth for the Google-built OS. Over the course of 2010, Android developer support had steadily climbed each quarter, peaking at 39% in Q4 2010.
Considering the events that could have precipitated this shift in developer support, Flurry has identified two probable causes:
1. iPhone Launch on Verizon: With iPhone’s arrival on Verizon in February 2011, three and half years after launching on AT&T, Apple closed the most significant vulnerability gap in its U.S. distribution, and likely worldwide. In fact, with its lengthy exclusive distribution agreement of iPhone on AT&T, it could be argued that Apple itself gave Android the opportunity to reach critical mass on other carriers, most notably Verizon. In that time, Google, Verizon and a host of OEMs worked hard and fast to push Android devices as an alternative to AT&T’s iPhone juggernaut. With Verizon’s launch of the iPhone, the pendulum appears to have swung back in favor of iPhone over Android development.
2. iPad 2 Launch: Establishing an installed base of more than 20 million tablet devices in less than one year, the iPad success story has been compared to taking a buzz-saw to the PC industry. Apple’s iPad shipments, from its last disclosed quarter, were higher than the initial first two quarters of iPad availability. Apple has additionally claimed that it is seeing the “mother of all backlogs.” Building efforts lag behind consumer demand for the device. We believe that wholesale consumer acceptance and adoption of tablets, which just a year ago was questionable within the industry, is further luring developers to build for iPad instead of Android.
While Android’s device installed base continues to surge, ongoing work to improve the Android Market layout and to push forward the adoption of Google Checkout are critical to its success. PayPal’s recent acquisition of mobile payment player, Zong, demonstrates that Google may not be enabling consumer payment quickly or well enough, which is inviting 3rd party competition and creating billing fragmentation. Furthermore, the development community is concerned about the rising cost of deploying across the Android installed base, due to the double whammy of OS and storefront fragmentation. With developers pinched on both sides of the revenue and cost equation, Google must tack aggressively at this stage of the race to ensure that Apple doesn’t continue to take its developer-support wind.
Although the Internet entered the mainstream a mere 15 years ago, life without it today is nearly incomprehensible. And our use of the web has rapidly changed as well. In simple terms, it has evolved from online directories (Yahoo!) to search engines (Google) and now to social media (Facebook). Built on the desktop and notebook PC platform, the web’s popularity is significant.
Today, however, a new platform shift is taking place. In 2011, for the first time, smartphone and tablet shipments exceed those of desktop and notebook shipments (source: Mary Meeker, KPCB, see slide 7). This move means a new generation of consumers expects their smartphones and tablets to come with instant broadband connectively so they, too, can connect to the Internet.
In this report, Flurry compares how daily interactive consumption has changed over the last 12 months between the web (both desktop and mobile web) and mobile native apps. For Internet consumption, we built a model using publicly available data from comScore and Alexa. For mobile application usage, we used Flurry Analytics data, now exceeding 500 million aggregated, anonymous use sessions per day across more than 85,000 applications. We estimate this accounts for approximately one third of all mobile application activity, which we scaled-up accordingly for this analysis.
Our analysis shows that, for the first time ever, daily time spent in mobile apps surpasses desktop and mobile web consumption. This stat is even more remarkable if you consider that it took less than three years for native mobile apps to achieve this level of usage, driven primarily by the popularity of iOS and Android platforms. Let’s take a look at the numbers.
The preceding chart compares the average number of minutes consumers spend per day in mobile native apps vs. the web. For mobile apps, Flurry tracks iOS, Android, BlackBerry, Windows Phone and J2ME. And for the web, our figures include the open web, Facebook and the mobile web.
Flurry found that the average user now spends 9% more time using mobile apps than the Internet. This was not the case just 12 months ago. Last year, the average user spent just under 43 minutes a day using mobile applications versus an average 64 minutes using the Internet. Growing at 91% over the last year, users now spend over 81 minutes on mobile applications per day. This growth has come primarily from more sessions per user, per day rather than a large growth in average session lengths. Time spent on the Internet has grown at a much slower rate, 16% over the last year, with users now spending 74 minutes on the Internet a day.
As a note of interest, Facebook has increasingly taken its share of time spent on the Internet, now making up 14 of the 74 minutes spent per day by consumers, or about one sixth of all Internet minutes. Considering Facebook’s recent leak regarding Project Spartan, an effort to run apps within its service on top of the mobile Safari browser, thus disintermediating Apple, it appears Facebook seeks to counter both Apple and Google’s increasing control over consumers as mobile app usage proliferates.
Games & Social Networking Dominate Mobile App Usage
With mobile app usage soaring, Flurry additionally studied which categories most occupy consumers’ time. For this snapshot, Flurry captured time spent per category from May 2011 across all apps it tracks, now totaling more than 85,000. The results are shown in the pie chart below.
The chart clearly shows that Games and Social Networking categories capture the significant majority of consumers’ time. Consumers spend nearly half their time using Games, and a third in Social Networking apps. Combined, these two categories control a whopping 79% of consumers’ total app time. Further, as we drill down into the data, consumers use these two categories more frequently, and for longer average session lengths, compared to other categories. Any way we slice it, Games and Social Networking apps deliver the most engaging experience on mobile today.
With a better understanding of how consumers spend their time across app categories, Facebook’s Project Spartan makes even more sense. As a category, social networking – which is Facebook’s core competency – commands the second largest allocation of consumers’ time. Games, which typify the most popular kind of app played on the Facebook platform itself, are also the top categories on both Android and iOS platforms. As interactive media usage continues to shift from the web to mobile apps, one thing is certain: Facebook, Apple and Google will all expend significant resources to ensure that no one company dominates owning the direct relationship with the consumer.
Last year, Flurry reported that iPhone and iPod touch game sales surged from 2008 to 2009. From a standing start, and in just one year, iPhone games captured 5% of the mature U.S. video game market. A year later, we revisit how the increasing popularity of iOS (iPhone, iPod touch and iPad) and Android games continue to increase their U.S. video game market share. With an additional year of trend data, the magnitude of disruption is increasing, in particular within the portable gaming category.
For this year’s report, Flurry once again leverages publicly available market data in the news, released by companies such as the NPD Group (e.g., Gamasutra’s Behind the Numbers series). We combine this data with our own estimates of game category revenues from iOS and Android devices. Flurry Analytics, the company’s mobile application analytics service, tracks more than 12 billion anonymous, aggregated use sessions per month across more than 80,000 applications. Of this, nearly 40% of all consumer app sessions are spent on games.
For 2010, we expanded our iPhone and iPod touch numbers to include revenue delivered by tablets and Android devices. When running this analysis a year ago, the iPad had not yet launched and Android gaming revenue from 2008 and 2009 had not yet contributed enough revenue to meaningfully affect industry market share. For the sake of a consistent year-over-year comparison in all other aspects of this analysis, we continue to exclude retail PC game revenue, and once again do not include online digital game sales.
Apple and Google Platforms Push Forward into Video Gaming
From 2009 to 2010, iOS and Android game sales increased from 5% to 8% market share within the U.S. video game market. Specifically, we estimate that iOS and Android game revenue increased from $500 million in 2009 to more than $800 million in 2010. Of this, the significant majority of revenue was generated by iPhone games. And while we do not include retail PC game revenue in our total snapshot, which we estimate was $700 million in 2010, it’s worth noting that smartphone and tablet game revenue surpassed the U.S. PC game category for the first time in 2010.
Studying the chart above, console and smart-device games have increased at the expense of portable gaming. Overall, total U.S. game revenue from 2009 to 2010 is relatively flat, totalling $10.4 billion and $10.7 billion, respectively. However, while console game revenue increased slightly, from about $7.4 billion in 2009 to $7.8 billion in 2010, the combination of declines in portable gaming software and a jump in smart-device app sales has squeezed the portable game category down from 24% market share in 2009 to just 16% in 2010. It’s clear that prolific intalled base gains by Apple and Android devices, low priced games (including a very robust free-to-play model enabled by in-app purchases) and seamless digital distribution to games on devices so near to consumers 24-hours-a-day, is driving potent industry-disruption.
Over 2011, we expect to see continued and significant smart-device game growth fueled by the recent launch of iPad 2, iPhone coming into distribution on Verizon, the expected release of iPhone 5, a relentless expansion of Android devices by leading OEMs across all major U.S. carriers, and Google’s enablement of in-app purchase billing, a proven key driver in iOS game revenue.
U.S. Portable Gaming: Mario’s Burning Platform
Recently, Nokia CEO Stephen Elop, passionately described a burning platform Nokia had itself set ablaze, largely as a result of its own strategic choices. Allegorically, despite Nintendo CEO Satoru Iwata’s stated concern that “these [mobile] platforms have no motivation to maintain the value of gaming” during his keynote at the most recent GDC conference, Nintendo may also be struggling with its own burning platform: Nintendo DS. Let’s look at the numbers.
From 2009 to 2010, iOS and Android game sales have spiked significantly, resulting in nearly a doubling of their market share. With both Nintendo DS and Sony PlayStation Portable shrinking in sales, while smart-device game sales simultaneously grew by more than 60%, iOS and Android games now represent more than one third of the portable game category. The net effect is that the U.S. portable gaming category, as we define it, has declined from $2.7 billion in 2009 to roughly $2.4 billion in 2010.
Wedbush Morgan Securities video game analyst, Michael Pachter, points out that the “onslaught of $1 games is going to continue” and that "[Nintendo and Sony] are going to have to share the market with Apple and Android.” Our numbers quantify just how much. Further, as iOS and Android continue to change the paradigm of casual gaming, the battle between Nintendo against platforms such as iOS and Android will intensify. Mario may indeed be standing on a burning platform.